Area's economic sectors gear up in new year

Outlooks are seen as strong for some, more modest for others.

Experts see local tourism in 2012 continuing the past year's good growth.

Photo By JOHN DAVENPORT/jdavenport@express-news.net

The Valero Three Rivers Refinery in Three Rivers, Texas between San Antonio and Corpus Christi refines a lot of oil from the Eagle Ford shale formation where the process of hydraulic fracturing is taking place.

Photo By Jae C. Hong/AP Photo

In this Aug. 12, 2011, file photo a cow grazes in a dry field near Westbrook, Texas. Texas' historic drought brought the biggest one-year decline in cows with an estimated 600,000 fewer bovines in the state now than on Jan. 1. Beef economist David Anderson said the declining cow numbers will lead to tighter supplies from fewer calves and as much as a 5.5 percent increase in beef prices next year.

Photo By Courtesy photo

A Boeing 787 is being upgraded at the Port San Antonio facility. St. Philip’s College recently joined forces in a work force training venture with the port.

Rackspace shares jumped 72.68 percent during 2012.

Photo By Tom Reel/Treel@express-news.net

Home builders are expected to start at least 10 percent more homes in 2012 than they did last year. In this 2011 file photo, crews start a home in the KB Homes Bella Vista neighborhood.

Photo By HELEN L. MONTOYA/Helen Montoya

Patricia Casas makes her way through the crowded aisles at H-E-B Plus on Friday Nov. 25, 2011. More than 2500 people lined up outside waiting for the doors to open at 4 in the morning.

In this special report, representatives from selected economic sectors, including job seekers, discuss the outlook for their industries and themselves in 2012.

Eagle Ford

Drilling and oil and gas production in the Eagle Ford Shale will continue to boom in 2012, experts said.

“It's very robust, and it will be developed for a very, very long time,” said David Pursell, a managing director at Tudor, Pickering, Holt & Co., a Houston-based investment bank focused on the energy industry.

Drilling permits in the Eagle Ford have jumped from 26 in 2008 to 2,838 in early December, according to Texas Railroad Commission data.

Impediments exist, though, to development of the shale, a vast underground formation that swoops from East Texas south of San Antonio to Webb County.

Shortages of equipment exist, and “there could be water issues if we have a drought next summer,” Pursell said, because water is needed to hydraulically fracture the shale to get oil and gas out.

Among them was Treva Dickson, 60, who has been searching for full-time employment since June after being laid off as an instructional assistant with the North East Independent School District. She's one of the casualties of public education cuts imposed by a lean state budget.

“It's been horrible trying to find something, especially at my age,” Dickson said. “I'll do anything. I just need a job.”

Dickson has been working part time as a customer service assistant in the evenings so she can look for full-time work during the day.

She said she had gotten at least one or two job interviews a week. “They tell me, ‘Boy, you've got the experience. (We) wish (we) could hire you, but we're not sure how many we're hiring.'”

Terri Gourrier, 55, also was hunting for a job. She lost her last one as a freight manager and head of customer service when San Antonio's Judson-Atkinson Candies Inc. shut down in October.

She described her job search as “slow.”

Gourrier is hoping to take advantage of a state program to help get the education she needs to start a new career, possibly as a respiratory therapist or X-ray technician.

On Tuesday, the Economic Policy Institute in Washington reported that the ratio of unemployed workers to job openings was 4.2-to-1 in November. It's the 152nd straight week that the ratio has been above 4-to-1.

Agriculture

The agricultural sector in Texas was wounded by a record-breaking drought last year, forcing ranchers to sell off cattle younger and lighter than normal and preventing farmers from producing many crops. Recent rains in the San Antonio area have helped some but not all producers get ready for a new planting season.

Zack Yanta, who farms and ranches southeast of San Antonio, said producers are left hoping for more rain so they can take advantage of commodity prices expected to remain strong in 2012.

The aviation sector in San Antonio received a boost this month when Boeing chose to move aircraft maintenance and modification work once done at its Wichita, Kan., plant to San Antonio.

That will bring 300 to 400 jobs to San Antonio over two years plus an image-boosting package of work maintaining Air Force One and other components of the nation's fleet of executive aircraft.

Aviation companies in San Antonio have stayed busy despite a flat 2011 in the sector nationally.

Gore Design Completions expects to stay at close to full capacity through the year as it delivers a record number of aircraft interior renovations to customers. Jeff Potter, Gore's director of business development, said more contracts are in negotiation in an environment he considers “robust.”

Technology

Last year, the computer cloud industry grew to about $40 billion, and it is expected to hit $241 billion by 2020, according to Forrester Research.

A slow economy and more access to mobile services will continue to drive the cloud's adoption, said John Engates, chief technology officer at San Antonio-based Rackspace Hosting Inc.

“What we're in right now is an era where we're trying to do the land grab. We're still early on in the adoption of cloud computing,” he said.

Housing

The residential real estate market has been treading water, but has not been robust, for several years in San Antonio. The San Antonio Board of Realtors and the Greater San Antonio Builders Association expect to see the market gradually improve in 2012.

“The worst is behind us,” Jack Inselmann of housing research company Metrostudy told GSABA members in a housing forecast. “We should sell more houses. We should see more activity.”

Although too many existing homes are for sale, that inventory level has dropped recently to 7.2 months. Six months is considered the equilibrium mark, balanced between homebuyers and sellers. Home prices haven't been rising much, but they have — generally — held steady across the market.

Retail

“The prediction is for modest growth locally in retail trade. Certainly in 2011 we had a better retail and economic situation here than just about anywhere else in the country, and we expect that to continue,” said Bill Sirakos, Frost Bank chief economist.

“There won't be a gigantic pickup in activity, but with the ongoing Eagle Ford activity, that will certainly contribute” to the prediction that 2012 will be better than 2011, he said.

“There is an optimism that we will continue this year to see what it is we have been seeing in 2011, but there will also be fits and starts to the economy (locally) ... in part because there is yet no underpinning of a solid recovery to the national economy.”

Tourism

“For the most part, we expect to continue the trend from 2011 where we saw good growth and limited new supply (of hotel rooms) because lenders are not offering funding for projects. But in demand growth, a 4 percent growth (for the South Texas region) over 2011 is reasonable,” said Todd Walker, senior vice president of Source Strategies.

The 4 percent growth in demand translates to an expectation of a minimum of 616,000 additional room nights sold in 2012 over 2011, Walker added.

“At an average rate of approximately $92, this translates to an increase of approximately $57 million across the South Texas metro areas that include San Antonio,” he said, referring to a projection for the area from San Antonio to Corpus Christi, south to the Rio Grande Valley and west to Laredo.

Trade

On the international business front, the Free Trade Alliance San Antonio is working with companies in South Korea, China, Europe and South America for possible investments in San Antonio, said Kyle Burns, alliance president and CEO.

“We believe some will come to fruition” in 2012, Burns said.

CPS Energy formally will announce today the winning bid for a 400-megawatt solar project, in which a South Korean company has proposed to build a solar equipment assembly plant in San Antonio.

The alliance also will open in 2012 an expansion of its International Business Development Center, a 2,500-square-foot incubator near San Antonio International Airport, which will assist foreign companies seeking to enter the U.S. market.